Abstract

With the “Sapin II Act”, passed on December 9, 2016, France has very decided to take the lead on the say on pay issue. It does so not only by way of preempting the revision of the European shareholder rights Directive (SRD), adopted on May 17, 2017, but also by way of electing the strongest version of the Directive’s procedural requirements, through the adoption of an annual double binding shareholder vote, ex ante and ex post, such as to change the very nature of the mechanism and transform a mere “say on pay” into a real “decide on pay”.

This combination of an ex ante binding vote, on the UK model, followed by an ex post binding vote, on the Swiss model, is rather unique and has consequently raised concerns from the battlefield. In particular, the compulsory character of the ex post vote has been strongly criticised because of the uncertainty created for top executives since the payment of their variable and exceptional remuneration is made conditional upon ratification by shareholders, even if it is perfectly in line with the remuneration policy voted the year before.

However, the excessive focus on the legal nature of the ex ante/ex post votes at the general meeting of shareholders seems to have overshadowed aspects of the say on pay other than procedural, contained in the SRD II. As a result, the brand new French say on pay mechanism has yet to be significantly revised by June 10, 2019. The optimist may see it as an opportunity to think about reversing some of the options retained in the Sapin II Act and to soften it with more “flexibility and proportionality” elements, which can only be based on a more coherent and general vision.

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